Implications of OPEC’s unexpected oil cut on fuel costs
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In recent news, OPEC and its allies announced a surprise move to slash oil production by more than 1.6 million barrels a day. This decision will have a significant impact on US gas prices. As a result, Brent crude futures and WTI, the US benchmark, experienced a 6% increase in trading.
Although the spike in oil prices will affect gasoline prices, the impact will be felt more quickly. RBOB, the most closely watched wholesale gasoline price, has already risen by approximately 8 cents a gallon in morning trading.
The inflation monster is reawakening with OPEC’s production cut announcement. It is a game-changer for the White House and will have major economic implications. As a result, US gas prices are expected to rise. The national average currently stands at $3.51, but with OPEC’s move, it could reach $3.80 to $3.90 in the near future.
While we won’t see prices soar as high as $5 a gallon, it’s likely that US drivers will experience a significant increase compared to last year. Moreover, if there are any hurricanes or storms affecting production along the Gulf Coast, prices could rise even further.
Looking back at the past, US gas prices reached a record high of $5.02 a gallon on June 14, but eventually started to decline due to various factors. However, the situation has changed, and we could see prices approaching or even surpassing last year’s levels.
It’s worth noting that the current average gas price of $3.51 is just below the average on Feb. 23, 2022, the day before Russia’s invasion of Ukraine. The tension in global energy markets is driving these fluctuations.
Despite the potential for higher gas prices, the US has plans for additional releases from the Strategic Petroleum Reserve, along with increased oil production and refining capacity. However, compensating for a 1 million barrel cut by OPEC+ will be challenging.
OPEC and its allies have the ability and motivation to cut production. Therefore, it is essential for US drivers to be prepared for potential price increases at the pump. Stay informed about the latest developments and trust our company to provide exceptional software development solutions for all your needs.